Source: Textiles Committee, Mumbai

 

Introduction

 

The economy of India is the fourth largest in the world after U.S., China and Japan when ranked on the basis of GDP by purchasing power parity and when ranked with exchange rate method, India is the 13th largest Economy in the world. The Indian market reflects considerable diversity in income levels and lifestyles. Although India's per-capita GDP is one of the lowest among the developing countries, a significant segment of the population (an estimated 200 million people) has significantly higher income. A study by the National Council of Applied Economic Research (NCAER) projected that India's middle class would be expanded to nearly half the country's total population by 2006 and also projected that the rich and the middle income class together will increase from 29.6 million households in 1997-98 to 97.1 million households in 2006-07. Along-with the shift of the lower income households to the high-income categories, the Indian consumer credit is growing by 35 to 40 percent annually; new cardholders are increasing by 25 to 30 percent annually. Buying has become a year-round phenomenon in India than the seasonal demand earlier.

 

Consumers in India spend approximately 9 percent of their disposable income on clothing and footwear, and nearly 47 percent on food, alcohol, and tobacco, compared to 5 percent for clothing and shoes, and 36 percent on food, alcohol and tobacco in the United States. Clothing expenditures in India tend to be relatively higher for households with higher incomes. Currently, disposable incomes of the majority of Indian consumers are so low relative to their basic needs that there is little residual for spending on better quality clothing. As disposable income increases, consumers are expected to spend more on purchases of quality clothing.

 

Nearly 72 percent of the Indian population lives in rural areas. While both rural and urban markets are growing significantly, the rural market is estimated to be growing approximately twice as fast as the urban market. The rural share of total consumer purchases rose from 62.6 percent in 1998 to 66.6 percent in 2008, showing an increase of 4 percent. A number of factors have fueled consumer spending growth, including rising prosperity and the emergence of a thriving consumer finance business. Recent researches suggest that the consumer preferences have shifted from low-valued items toward the higher priced products.

 

Three principal components define the Indian textile market and are described as follows.

• Domestic household market.
• Non-household consumption
• (includes institutional, industrial and technical textiles) and,
• Textiles and clothing exports

So far as the contributions of these sectors to the total market size are concerned, the domestic household sector alone consumes approximately 50 percent of the total production, the non-household sector consumes 29 percent and export sector accounts 21 percent of the total cloth production in the country. That’s why the domestic households sector can be called as backbone of the Indian textile industry.

 

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The authors are associated with Textiles Committee, Mumbai